From a prospective of intellectual history, the Republicans and Democrats share some of the same roots. Both are Liberal Parties.

The parties focused their efforts on different issues. The Democrats were the Free-Trade Party, and the Republicans were the Free-Labor Party.

This is a loose framework for studying patterns in political thought and policy-makings. The Parties approach most policy issues in a scatter-shot pattern based on political necessity. However, there are fundamental issues where the Party remains committed to a specific philosophy. This is perhaps shaped by the the coalitions that founded each Party. The Republicans have always been a hybrid of Free-Labor Liberals and Evangelical Protestants, while the Democrats consisted of Free-Trade Liberals and Catholic immigrants.

The Republican Party, and its predecessors (The Federalist and Liberal Parties) are an Anglo-Saxon Liberal movement. They can trace their core ideas to the same cluster of political philosophers: John Locke, David Ricardo, David Hume, Adam Smith, Edward Burke, James Madison, etc.

The Democrats intellectual history shares the same Anglo-Saxon Liberal influences, but takes ideas from Continental Liberalism. Continental European immigrants entered the Democratic party and influenced policy-decisions. Immigrants brought with them ideas from their homelands. This lead the Democrats to adopt a more Eurocentric outlook. Early Democrats, like Jefferson were supporters of the French Revolution and Jacobinism. Continental Socialism influenced Democratic policies in the early 20th century under the name Progressivism.

Due to historical contingencies the Party’s had fundamental core philosophies:

Republicans – Free Labor Liberalism
Democrats – Free Trade Liberalism

More or less, this amounts to Republicans emphasizing production, and Democrats emphasizing consumption. Liberals select parties based on their current priorities and can still respect the other party.

Republicans oppose all coercive and collective production – including employers (trusts and cartels) or employees (slavery, closed-shop labor unions). This values the individual freedom of workers above other policy needs.

Democrats traditionally opposed coercive restrictions on consumer goods. They oppose interference in the market that harms the entire nation to support a few protected businesses with powerful political lobbies. They were the Free Trade party for two hundred years.

There are strengths and weaknesses to these Liberal policies.
The Republicans are solid on Free-Labor issues, but tended towards isolationism. They are more skeptical of immigration, trade, and international alliances. Democrats, on the other hand, pick up utopian collectivist ideas from Europe ranging from Jacobinism to Marxism, which threaten Liberalism. Collectivist ideals of social equality naturally contradicts individualist work ethics, leading Democrats astray on this important issue.

The Democrats were more ideologically divided than the Republican party throughout history. In short, they were torn by the tradeoff between Anglo-Saxon individual liberty and European concepts of social equality. Somehow, they made this work. They introduce foreigners to the Anglo-Saxon economy and aid the transition to the United States.

Whenever one party is anti-liberal on a key issue, the other party noticeably rises.

Republicans dominated the late 19th century due to their Free Labor philosophy. The Democrats won power in the early 20th century by tearing down the Republican tariffs and beginning a new age of Globalization.

Republicans, so concerned with production, often attempted to ‘protect’ business with import/export tariffs – yet America became a free trade nation thanks to the Democratic Party.

Democrats are conflicted on free labor issues. Yet Americans abolished slavery and refused socialism. Because of this, Americans in the 21st century are freer than they were in the 19th.

Interestingly, religious conservatives attached themselves to those Liberal Parties along the same lines. Religion provided a moral foundation for the core Liberal principles lacking in purely secular Liberal parties of Europe. Religious support for Liberal parties perhaps explains why there is no “conservative” party in America, as defined according to European Norms. Both American Parties are fundamentally future-oriented.

Evangelical and Conservative Protestants prized hard labor and individualism leading them to radically oppose to all coercive labor systems such as slavery and socialism. The Evangelical Movement united with Classical Liberals as the founding members of the Republican coalition in the 1850s. They carried Republican Presidents from Lincoln to Bush to victory.

Catholic immigrants have a more internationalist perspective and voted with the free trade and pro-immigration Democratic Party. Catholics believe in a universal economy and society. This belief holds that God spread resources unevenly throughout the world to promote commerce between peoples. Universalism is a needed concept to encourage assimulation.

These liberal/conservative fusions gave both parties incredible strength on their core issues while gradually eliminating what was wrong in American society.

These debates seem to continue.
Take tax as an example. The power to tax is the power to destroy. Even a minimalist government requires some taxes, so what do you partially destroy? Democrats, historically, tax production through the income tax. Republicans tax consumerism and trade through as import tariffs and the domestic sales tax (“Value-added tax”).

Marxists, socialists and other alien philosophies lament that the
Democrats and Republicans are essentially the same party (“The Republocrats” and various nonsense). In a sense, they are correct. We have two Liberal Parties because neither party became a true left-wing or right-wing party as in Continental Europe.

Here’s the problem today: Are the Democrats still the free-trade and pro-consumer Party?

Republicans, starting in the 1980s under Reagan, are becoming a Free-Labor and Free-Trade Party. The Reagan Revolution may have converted the Republican Party into a pure Classical Liberal Party.

The Democrats retained their Free-Trade principles through the Clinton Administration. They expanded global trade to an unprecedented level. And then? Clinton left office and the Democrats become increasingly reactionary and conservative on trade issues. They echo the arguments of 19th century anti-trade Conservatives.

Look at their latest presidential nominees, all oppose free trade. And so they are isolationists in international affairs and trade. They expect allies to do all the work without US assistance and they refuse to trade with allies. Trade networks are the fundamental basis of Liberal Internationalism, so the Democratic movement against trade is destroying American alliances and international institutions.

What happened? I think the “New Left” has corrupted the Democratic Party. The emphasis has shifted away from economically beneficial policies to the Holy Trinity of Identity Politics: Race, Gender, and Religion. This pulls the Democratic Party away from its individualist Liberal origins to a form of conservative tribalism. These are collectivist concepts that are artificial. It treats an independent individual as if he was nothing more than a cell of a colonial body. This new Leftism is a departure from the rationalist policies of classical Liberalism. It would also explain the sudden isolationist stance, for instance.

The two-decade long decline of the Democratic Party’s fortunes must be partly due to its abandonment of Liberalism. In 2004, the majority of Catholics voted for a Republican President for the first time in history. In the 1990s, the most successful Democrats were part of the DLC or Blue Dogs.

I think the pendulum will shift back to a Liberal Democratic Party over the long-term. The Blue-Dogs gained the greatest proportion of seats in Congress recently.